Lagos regulations on ride-hailing companies, fair or outrageous

Since the phase out of motorcycles and tricycles from the roads of Lagos state, the government has shifted its attention to ride-hailing companies, Uber and Bolt. There have been series of reported cases of clashes between Uber/Bolt drivers and the authorities.

Reportedly, the Vehicle Inspection Officers (VIO) have been requesting certifications, hackney permits, and strangely, operating licenses as well, which are supposed to be obtained by 3rd party operators themselves, from these drivers as requirements to operate in the state.

Apparently, sometime ago, Uber had stopped making hackney permits, which turn private vehicles to commercial ones, a requirement, and now that it is required by the state it has become a source of inconvenience for all stake holders.

Although there has been no official announcement just yet, it seems as if the conversations with authorities and affected companies are leaning towards a N10million naira license fee and N25million fee for those with more than 1000 drivers.
Subsequently, the ride-hailing companies would pay annual renewal fees of N5million, and N10million if they have over 1000 drivers.

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For transport companies that own their own cars with employed drivers, the regulation may mandate them to pay N5million. However, if their drivers exceed 50, they would be required to pay N10 million.

Operators, who own their vehicles and employ drivers will also be required to pay the fee of N5million and N10million if there are more than 50 drivers. The state government also expects to earn 10% on the fee for each trip.

However, these regulations are not finalized and may still be amended; like Ayoade Ibrahim, the President of the National Union of Professional E-hailing Driver- Partners said, conversations with the state government are still being had as regards that.

Ayoade also said that to argue their case, the government would need to reconsider its stance, as such outrageous fees would not only affect these businesses but also stifle the services provided, which in turn would affect citizens that use the platforms.

Nevertheless, tech companies would need to be flexible enough to respond to changing rules and policies, not only at the national level but locally too, mostly because states and municipalities have their own sets of rules.

Regulations and regulatory bodies are undeniably important, to have a process and order for the way things are done. However, such outlandish expectations from businesses or startups could be deterrents to innovative technology solutions which may lead to more conducive living and that otherwise foster economic growth.

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Here’s why:
1. Policies can become market catalysts: the government can implement a policy that may change social behavior in business by underwriting the development of new technology that would bring necessary change, like in this case, potentially imposing on the transport sector more taxes than are necessary would likely make investors lose interest.
2. A stable political system can make businesses: friendly decisions promote local businesses and attract foreign investors. Unstable systems, on the other hand, present challenges that jeopardize the ability of government to maintain law and order.
3. The government gets money to spend from taxation; increased spending requires an increase in taxes or borrowing. Any tax increase will discourage investment, especially among entrepreneurs, who take the risks of starting and managing businesses which will eat into the limited pool of savings, leaving less money for private investment which in turn leads to elimination of jobs. This is true in reality when you see the number of drivers and riders who have been and may be out of jobs as a result of the new transport policies in Lagos state.
4. The requirements for permits or licenses have effects on business – tech businesses might spend a lot of money and time to comply with regulations that ultimately prove to be ineffective and unnecessary. Fair and effective regulations should promote business growth.